Sapper Consulting Blog

5 Questions to Ask When Evaluating a Lead Generation Company

By Ryan Myers on Jun 16, 2017 10:04:05 AM

TL;DR - Ask that company: “How many leads end up in closed deals?” and work backwards from there.

But if you want a little more to go on than that:

Lead generation takes a lot of time and energy. Time and energy that you should spend on servicing the clients you currently have. That’s what you do best, and that’s why you leave the lead gen up to someone else.

But you don’t want to hand over such an important task to just anyone. After all, leads are the lifeblood of any sales company. You want to ensure that you are getting your money’s worth, but you also want to work with a lead generation company that is invested in your success.

Here are a few questions you should ask to make sure your lead genartion company isn’t charging you too much for bad leads.

Are they providing too many leads? (Seriously)

We usually ask the opposite question: “Am I getting enough leads?” But solid prospecting calls for quality over quantity.

It’s easy to be distracted by large numbers. Thousands of names, numbers, and email addresses look promising when the lead gen company hands them over. But if you then have to make cold calls to a bunch of unqualified leads, you’ll just be buried in a pile of rejections.

Instead, you want highly targeted and segmented prospects. You want to know that you’re handing your sales team a gift, not a burden Another great question is:

Where are these leads coming from? (Phone, email, etc.)

For example, a lead generation company might serve you up 50 good leads at 1 company. At first, you’re pumped. What did your mom say about something that sounds too good to be true.

How many realdecision makers do you think are in that list? How much time (yours and theirs) do you have to waste before you get to the right name? If your pitch is tailored to C-level executives, you don’t need to waste time on a meeting with the Junior Coordinator of Caffeine Transport (coffee runner).

So be sure that you are getting prospects, not just names.

Are they charging too much per lead?

When you start a campaign, you want to know how much you should be paying for leads. We all like specific, tangible amounts so we know if we’re getting a deal or getting ripped off. But there is only one honest answer to the question, “How much is too much to pay for a lead?”

It depends.

That isn’t a weasel answer. It truly depends on a number of factors. Here are a few you should discuss with your lead gen company to determine how much you should pay for a lead:

How qualified the leads are: Are you going to have to wade through a heap of duds before talking to truly qualified leads? If so, you might be paying a small amount per lead but a large amount per client. And that’s the real measure.

The lifetime value of a new client: The only way to tell if you are paying too much for lead generation is to know how much a client is worth to you. Are you selling a one-time service or product? Or will a client stay with you for years, generating tens of thousands in revenue? The more you will make from a new client, the more you can pay to find and convert them.

The campaign budget: The highest ROI in the world looks great on paper, but if obtaining it will take more than you can afford, you will need to adjust your strategy. You might need to scale back the initial campaign or look for a more targeted approach.

While there isn’t a universal dollar amount to tell you how much you should pay for leads, there are some general guidelines. One standard is that your ROI for a campaign should be at least 5X. Another is that you should pay around 5%-15% of a customer’s value per lead.

What are their targeting and outreach processes?

For example, do they split them up? (They should.) How?

Ask about their targeting strategy. Do they target by vertical, title, employee size, something else? There isn’t one right answer here, but if they stumble through their response, politely tell them you have to shampoo your hair and let them go.

What is their email strategy?

Most likely, the company is doing at least some generation via email. If they do, ask how big their targets are. This is another case where smaller is often better.

For example, are they reaching out to 10,000 prospects at once or 200? Your instinct might tell you that more is better, but think about what those emails look like. How much do those 10,000 people have in common? What are the chances that they all have the same interests? The same problems and desires?

Then why would they all want to be spoken to in the same way? Why would they all want to receive the same email?

If, on the other hand, the company is targeting 200 individuals, they have a much better chance of striking a chord with the recipient. It still won’t be as effective as a one-to-one conversation, but at least they won’t feel like they are just an anonymous face in a crowd.

Is the lead generation company a partner?

Lead generation shouldn’t be a commodity exchange. You want to work with a partner who can help you close more sales, not just hand over a list. Is your lead gen company providing advice on how to target? Do they know your space well enough to see if you are overlooking an important area?

They don’t need to be experts in your field (if they were, they would be your competition), but they should know enough to provide a useful outsider perspective. They should be willing to have these kinds of conversations with you at least.

Takeaway

A solid lead generation strategy can make all the difference in whether your company is growing or shrinking. Don’t settle for the cheapest or flashiest option, though. Look for a company who knows how to work with you to find and cultivate clients, not just generate a long list of shots in the dark.

To find out how Sapper Consulting can help you create a steady flow of new clients,click the button below to contact us.